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New to this board : reading CARE act bill just signed re RMD. We’ve been taking RMD for years. It seems CARE Act will permit us to temporarily stop sone of our RMDs without penalty thru the end of 2020. Then we would be required to restart for 2021.

Is this a correct interpretation of the ACT?

Thx for help
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It seems CARE Act will permit us to temporarily stop sone of our RMDs without penalty thru the end of 2020. Then we would be required to restart for 2021.

Is this a correct interpretation of the ACT?


Yes, except it will allow you to stop all of your RMDs, not just some of them. In fact, you could potentially put some/all of the money you've received in the last 60 days back as a rollover, too.

AJ
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I don't know about the CARE act but the $2 Trillion Coronavirus Relief Bill addresses folks older than 70.5 as not being required to take their Required Minimum Distribution for 2020. My wife and I take monthly distributions. We do not need the RMDs to live on and since we would be selling securities/bonds/MFs at a depressed value in order to meet the monthly RMD we have stopped the draw.

We just need to remember in January 2021 to start them up again.

Regards,

ImAGolfer (retired '03)
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I don't know about the CARE act but the $2 Trillion Coronavirus Relief Bill addresses folks older than 70.5 as not being required to take their Required Minimum Distribution for 2020.

It's the same law: "CARES" Coronavirus Aid, Relief, and Economic Security. And it's not just those over 70 1/2 who don't have to take RMDs. Those who are taking RMDs from inherited IRAs also can skip their RMDs this year.

AJ
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Yes, except it will allow you to stop all of your RMDs, not just some of them.

Including inherited? Some news reports say yes, some say no, so it's hard to draw a conclusion.

IP
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Including inherited? Some news reports say yes, some say no, so it's hard to draw a conclusion.

This report https://www.cnbc.com/2020/03/30/inherited-an-ira-you-can-ski... quotes Ed Slott, who is a fairly well recognized expert on retirement plan tax law:

The RMD relief from the $2 trillion coronavirus bill also extends to children, grandchildren and trusts inheriting retirement accounts.

“Inheritors get the one year off, a waiver of RMDs,” said Ed Slott, CPA and founder of Ed Slott & Co. in Rockville Centre, New York. “Any beneficiary who doesn’t want to take the distribution doesn’t have to.”


AJ
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Thanks!

IP
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Yes, except it will allow you to stop all of your RMDs, not just some of them. In fact, you could potentially put some/all of the money you've received in the last 60 days back as a rollover, too.

Unless CARES has a provision for undoing RMD withdrawals that occurred over 60 days ago, it doesn't allow you to waive all your RMD withdrawals in 2020. You're SOL for any RMD withdrawals made in January 2020.
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Unless CARES has a provision for undoing RMD withdrawals that occurred over 60 days ago, it doesn't allow you to waive all your RMD withdrawals in 2020. You're SOL for any RMD withdrawals made in January 2020.

Yes, unless you have a way-back machine, it's hard to change any withdrawals that you've already taken. That's why I said In fact, you could potentially put some/all of the money you've received in the last 60 days back as a rollover, too.

AJ
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ImAGolfer,

You don't necessarily have to start the RMD's again in January 2021 unless you would need the money then.

If the market's still down then you could wait longer in 2021 for a better recovery. There are no guarantees it will be better but that is an option you could consider if prices are still depressed in a big way. As long as you take all of your 2021 RMD by 31 Dec 2021, no penalty.
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In fact, you could potentially put some/all of the money you've received in the last 60 days back as a rollover, too.

I was lucky on a few fronts. I procrastinated on my RMD to 6 Feb. Plus it was just IRA settlement fund to Taxable settlement fund. Then backwards again with same settlement funds. May have made it a little easier, don't know. No other R/O in last year either.

Monday morning I rolled it back. It was a really short conversation with Vanguard once I got to the "IRA" department. It went like this:

Me: I wanna reverse my RMD I took on 6 Feb.
VG: OK. Is this in regards to the CARES Act?
Me: Yes.
VG: Where do you want to put it?
Me: Back into my IRA settlement fund.
VG: OK, I'll rollover $xxxx from your tax acct and deposit it in your IRA. Is that correct?
Me: Yes.
VG: (keyboard clicks) OK, its rolled over. Is there anything else I can help you with today? (my phone dings with a confirm)
Me: No. Thanks. Bye...


Lucky. That was it. Then I went to pickup my online grocery order then back home chill' for 2 more weeks before the next one.
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Does anyone have reason to believe that there might be a modification of that 60 day rule under the CAREs Act for those of us who, as of now, are "SOL" for having taken their 2020 RMD in January? Any historical precedent?
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Does anyone have reason to believe that there might be a modification of that 60 day rule under the CAREs Act for those of us who, as of now, are "SOL" for having taken their 2020 RMD in January?

I doubt it. The reason, at least in my mind, why RMDs were allowed to be stopped has to do with the plunge in the stock market requiring excessive number of shares needing to be sold to make the RMD. You sold before the plunge. I do not expect the gov't to willingly part with any of the tax income generated by these earlier RMDs.

IP
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Does anyone have reason to believe that there might be a modification of that 60 day rule under the CAREs Act for those of us who, as of now, are "SOL" for having taken their 2020 RMD in January?

I doubt it, but you could always suggest it to your Congressperson, to be included in the next bailout bill. That said, I doubt there will be much empathy for someone who took their RMD out before the market crashed.

Any historical precedent?

There's no historical precedent for waiving RMDs during the year they would been taken, even though RMDs have been waived before. For 2009, RMDs were waived, but that law was signed in Dec, 2008, so the waiver was in place prior to the beginning of the year in which the RMD would have been taken.

AJ
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Actually there may be precedent to allow this, but it's a bit of a long shot. Back in 2009 when RMDs were last suspended, the IRS issued Notice 2009-82 in October 2009 which extended the 60-day window for RMD distributions that had been made earlier (some plans didn't adopt the new rules quickly enough) in the year up through November 30, 2009.

The CARES Act defines eligible rollover distributions by replacing "2009" with "2020" in IRC section 402(c)(4). It is uncertain whether this change extends to the further modification of Notice 2009-82 or whether this needs to be addressed in a Technical Correction or further IRS action.

Ira
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